Using fleet telematics to reduce fuel tax reporting
By Bill Lockwood

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Telematics is literally the combination of telecommunications and informatics. It utilizes GPS tracking and information technology to ensure efficient fleet management and is used extensively by companies such as Wal-Mart and Verizon to manage their fleets. Along with the vehicle-tracking benefit of using telematics, its integration into data collection ensures the accurate reporting of information required in the trucking industry.

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Does your fleet incorporate telematics?
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The information recorded includes fuel tax reporting. In compliance with the International Fuel Tax Agreement (IFTA), drivers must record when crossing state lines for fuel tax reasons. Having the automated information technology of telematics integrated with IFTA tax compliant software provides an asset management solution that greatly decreases labor-intensive costs, ensures tax compliance and contributes to an increased ROI.

The IFTA is an agreement among the continental U.S. states to record the amount of fuel used across different jurisdictions by commercial carriers. The IFTA is used to redistribute taxes to the particular jurisdiction the carrier travels in, rather than pay fuel taxes to the U.S. state where the operational base of the fleet is located.

For example, the fleet operator pays a portion of its own state fuel taxes to the states the fleet travels through. The operator allocates taxes to these states by compiling the mileage its fleet travels in a particular state. This makes it necessary that a drivers record when they cross state lines. The allocation of taxes under the IFTA also includes the variances across states in regards to fuel tax rules and regulations. This variance is the fuel tax.

As carriers registered with the International Registration Plan (IRP), private trucking companies must keep detailed information on mileage and fuel-tax purchases to stay in accordance with the IFTA. This information is used to file fuel/mileage taxes quarterly. Records and receipts are kept for an 8-year audit, although all IRP and IFTA accounts are subject to be audited at any time.

With these audits, it is imperative that a company keeps highly accurate records. These records can become complicated to keep as some state and jurisdiction fuel tax rates can change every quarter. And some rates can change in the middle of the quarter, adding to the complication and the chance for human error.



Telematics can be an integral tool for trucking companies that want to meet the regulations set out by the IFTA to maintain compliance and reap the rewards that come from participating in the program. Many larger companies either have a dedicated employee who deals with this information full-time, or it has become part of a process required by an administrator each month. Although currently a daunting task for these logistics administrators, telematics can offer a solution most private trucking companies do not currently recognize.

In addition to eliminating the manual processes of gathering driver notes from log-books, telematics applications can help organize and automatically record information without driver influence. It can also be customized to account for the changing fuel tax rates by geographic region, which tends to happen frequently from state-to-state.

By using a GPS tracking device that integrates with tax software, drivers do not need to pull over and manually log the information needed when crossing state lines. By using telematics and vehicle tracking, the tax variations of fuel regulations will be automatically adjusted into software that tracks the fuel usage and mileage travelled in and out of particular states. This eliminates the tedious task of manually logging location information by the driver, and alleviates the administrative task of quarterly organizing this information correctly to be IFTA compliant.

Without a telematics system, drivers are required by the federal government to manually log and upload information in regards to driving across state lines. The information logged by the driver is reported to fleet managers. Administrators must then manually gather, report and upload all of this logged fuel tax, or reports of crossing state lines, to the government each business quarter. Telematics greatly decreases the cost and time associated with this inefficient process and nullifies the possibility of human error to overpay the IFTA or possibly report inaccurately to the government, which can help potentially eliminate an unnecessary audit.

Another aspect of state-to-state fuel tax variances is the indication of what the fuel is actually used for. Many states do offer rebates in the form of tax credits for nonhighway fuel use. For example, if a driver is circling the warehouse or uses fuel for an auxiliary power unit, then the fuel is not being used for a state's highway. This allocation of use can be hard to record and organize manually, but through telematics, the assessment of this can be used to prove fuel use.

With telematics, fleet management can oversee how fuel is being inefficiently used; and drivers, with the aid of information and communication, are more accountable for fuel usage. According to the U.S. Department of Transportation and U.S. Department of Energy, 33 percent of fuel consumption can be attributed to driver behavior.

With this in mind, a study conducted by GreenRoadTechnologies showed fleets utilizing telematics showed a 10 percent decrease in operational cost by reducing driver redundancy, vehicle running cost and optimizing travel planning. Of this 10 percent cost reduction, fuel savings averaged anywhere between 8 percent and 11 percent. This reduction was attributed to efficient travel planning, less idle-engine running and improved driving behavior.

Along with the convenience of automated fuel tax recording and ensured accuracy of fuel tax across state lines, telematics is also customizable to the changing policies of the trucking industry, just as the software customizes to state tax variations. The software can be easily modified to meet policy changes year after year. Overall, telematics not only proves to ensure fleet and driver efficiency and lower the costs of fuel and time, the technology, through automation and customization, ensures compliance with regulations and changing policies.

The global consulting firm Frost and Sullivan recently announced it predicts more than half of all medium and heavy commercial trucks in Europe will be built standard with fleet management systems that incorporate M2M telematics by 2017. Although this study reported on European commercial shipping trends, most, if not all, OEMs are global entities. This shows the growing industry trend, and perhaps the future, of telematics in fleet management.

Bill Lockwood is the vice president overseeing sales and new business development initiatives for the North and South American division of ROAMWORKS, with an emphasis on channel partnerships in some of the existing mature M2M markets. Lockwood brings with him an extensive history of accomplishments including the development of U.S. markets for electronic home-arrest monitoring systems for the U.S. criminal justice system during his tenure at BI Inc. in Boulder, Colo. He is involved in state, local and global associations representing many facets of the trucking/fleet, intermodal, government and emergency management industries.